Foley Hoag’s Emerging Enterprise Center blog has recently published several posts on a preliminary staff report, recently released by the Federal Trade Commission (“FTC”), which sets out a proposed framework for protecting privacy in the digital economy. Specifically, the report endorses the implementation of a “Do Not Track” mechanism to allow consumers to choose whether to allow the collection of data regarding their online activities.

The most recent post on the Emerging Enterprise Center blog is copied below and reflects the tensions that exist between companies that depend upon tracking technologies and consumer advocates seeking more protection over their personal data. As summarized by our Security, Privacy and the Law practice, two key predictions are worthy of note:

The industry powers will fight against “Do Not Track” and will win that fight.

Industry will accept some other form of regulation in exchange for defeating “Do Not Track.”

From a corporate social responsibility perspective, the current debate on protecting consumer privacy online needs to recognize that the right to privacy is a basic human right. At first glance, the collection by corporations of isolated bits of data about our activities online may appear to be trivial — especially when compared to the systems that authoritarian governments have been building to monitor and filter Internet traffic. But as an infamous class project conducted last year at Fordham Law School demonstrates, the aggregation of many isolated bits of data about an individual can end up taking a major “byte” out of their privacy.

Multi-stakeholder groups like the Global Network Initiative have been working for the last several years to protect and advance the human rights of freedom of expression and privacy in the information technology sector. Instead of accepting alternative regulation in exchange for defeating “Do Not Track”, industry heavyweights might want to consider redoubling their commitment to multi-stakeholder processes that could generate an industry-wide code of conduct that addresses the core concerns raised by the FTC’s report.

It is creepy that ‘they’ can and do track you out in the net, but ‘creepy is the new cool.’

There is just no question that some people accept the fact that they are being tracked and fed targeted online advertising. It is not just OK by them; it’s a value add. I don’t disagree.

But, for anyone who has read “1984” (and even a lot of people who haven’t) the notion of being tracked is creepy. There are a lot of these folks – perhaps a significant majority of the U.S. population – that feel this way.

In 2011 the FTC and Congress are going to pay attention to these concerns. It is good politics.

Prediction #1: Legislation in this area will be one of the few places where we will see bipartisan consensus in the next Congress.

Why: No Congressperson wants to be opposed to consumer privacy, and they all want to have supported some legislation that passed, when running in the next election.

Mark (and others) made the point that if you really end tracking, you will end Facebook. So, whatever happens it won’t be that. However, the political snowball is rolling down the mountain – there will be regulatory activity around consumer privacy.

The only question is: What will be the nature and scope of the activity?

The big boys (those with well established businesses that either make money or have ready access to capital) are going to be lobbying hard for a regulatory framework that does not dent their current business model.

Prediction #2: The big boys will fight anything that disrupts tracking and they are going to win this battle – no one in Congress wants to run on the platform that they put Facebook (or others) out of business.

But the big boys are going to have to trade something. The easy things for them to trade are procedural protections for the consumer.

The FTC wants the industry to adopt “privacy by design” principles. This means that companies should adopt internal processes to promote consumer privacy and security protections into their daily practices and to consider privacy issues at every stage of design and development of products and services.

The FTC wants the industry to make consumer data more available to consumers. This means allowing for increased consumer access to data collected.

Prediction #3: The big boys will trade lots of procedural protections for the consumer to prevent substantive regulation that will directly affect their business models.

Why: The big boys can afford the administrative burden implicit in procedural protections. It is just a matter of more money, more people and more oversight. A company that is well established and profitable or that has easy access to capital can afford to write the code, hire an army of new engineers, consultants, lawyers etc. and create an entire Department of Privacy Compliance and Protection.

In fact, to the extent that having to do all that makes it harder for start-ups, it may even be helpful to the established companies.

Some folks I talk to have expressed real concern about this looming regulatory push and how it might affect the entire ecosystem for digital media start-ups.

There is still a chance to influence the inevitable regulation that is upcoming and I am working on assembling a group of industry leaders to do just that. I recently sent out a letter (here’s a link) to people I thought might be concerned enough to actually do something.

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Gwendolyn is co-chair of the firm’s International Business practice group and head of its Trade Sanctions and Export Controls practice. She is also a member of the firm’s Corporate Social Responsibility group...More